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Clean power plan proposal should benefit nuclear energy

On June 2, 2014, the EPA released its proposed emission guidelines for CO2 emissions from existing power plants, called the Clean Power Plan Proposal, under §111(d) of the Clean Air Act. The proposed rule would require a 30% reduction in CO2 emissions from existing power plants from 2005 levels by 2030. Rather than setting limits that apply directly to affected sources, EPA has proposed CO2 performance goals for each state. The proposal would require states to develop plans to implement emission guidelines and submit them to EPA for approval by June 30, 2016, although extensions would be available. States would be required to meet interim goals from 2020-2029, and a final target by 2030.

EPA arrived at the state goals (expressed in average pounds per net megawatt hour) by first determining that the best system for emissions reduction (BSER) for CO2 emissions from power plants consists of two basic approaches and four building blocks. The basic approaches are (1) reducing carbon intensity from individual fuel burning electric generating units and (2) addressing CO2 emissions by varying utilization levels of coal, gas, nuclear, and renewable energy sources. To accomplish these two basic approaches and implement BSER for CO2 emissions from existing generating units, EPA applied measures from the following four building blocks:

Reducing CO2 emissions by improving efficiency by six percent;

Reducing the dispatch of coal units in favor of natural gas combined cycle (NGCC) units with a target of 70% of total generation from NGCC;

Shifting additional generation to low- and zero-carbon generation (nuclear and renewables); and

Increasing demand-side energy efficiency programs.

The proposal does not prescribe the means by which states will meet these goals. States have substantial flexibility in developing plans and can use multi-state, market-based approaches as long as each state’s goals are met.

Given the low-carbon benefits of nuclear energy, the proposal is, not surprising, broadly positive for the nuclear industry. The EPA recognizes that increasing the amount of nuclear capacity is a technically viable approach to support reducing CO2 emissions from affected fossil fuel-fired generation units. According to the EPA, policies that encourage development of renewable energy capacity and new nuclear and that discourage premature retirement of nuclear capacity could be useful elements of a CO2reduction strategies. The EPA also notes that, while more than half the states already have established some form of state-level renewable energy requirements, it is unaware of analogous state policies to support development of new nuclear units. The time may be ripe for states to shift from a renewableportfolio standard to broader clean energy portfolio standard that includes nuclear energy.

The EPA will accept comments for 120 days after the proposed rule is published in the Federal Register. The Agency will also be holding public hearings in Atlanta, Denver, Pittsburgh, and Washington, D.C., during the week of July 28, 2014.